Business leaders are depressed about their business prospects

Posted on September 22, 2022, 10:23 AMUpdated September 22, 2022, 4:17 PM

Even because the outlook for the French economic system darkens, the morale of business leaders is fading. The business local weather misplaced 2 factors in September, INSEE stated on Thursday. at 102, although the index stays barely above its long-term common, which stands at 100.

Except for development, all sectors contributed to the decline, confirming the slowdown in financial exercise in France. Amid uncertainty over the evolution of the battle in Ukraine, their value explosion, the specter of energy cuts this winter and vitality rationing, bosses fear about their prospects. Even within the service sector, which has benefited from an excellent summer time season for the return of international vacationers to France and the place the local weather stays at a excessive degree (106).

Production problem

The temper is darkish in retail. At 96, the index is transferring away from its long-term common. After a slight uptick in August, merchants worry inflationary penalties for family consumption. Reflecting their pessimism about the evolution of their exercise, “order intentions are sharply declining and are at their lowest degree since November 2020”, notes INSEE.

In business too, morale is fading. The index fell simply 1 level in September, however there have been many warning lights for a extra tense state of affairs.

As in earlier months, business leaders are pessimistic about their order books. Although barely decrease, inventories additionally elevated. This implies that they need to promote, and this at a time when home and worldwide demand is falling.

Beyond that, it is the manufacturing problem that worries. The INSEE survey undoubtedly confirms the steadiness of provide points – at a excessive degree. But when gasoline payments are rising in lots of sectors, producers are afraid to restrict their manufacturing and even interrupt it throughout winter. Concerns are felt in essentially the most uncovered sectors akin to chemical compounds, metallurgy, wood-paper and even plastics and rubber industries.

One in ten ETIs are able to cease manufacturing

“Energy has turn out to be the primary supply of our disaster,” stated Medef director-general Christophe Beaux. Hearing with leaders of different employers’ organizations on the Senate delegation to the businesses on Tuesday, he warned of the “potential cascading impact” of considerably shutting down manufacturing gear. “In the quick time period, the state of affairs is just not so dangerous for many corporations. But the prospects for the second half and future are dramatic,” he warned.

According to the vice-president of the Movement of Medium-sized Enterprises (Mété), Frédéric Courier, the slowdown in exercise is already perceptible. “The quantity of transport in France has decreased. We produce much less, however it isn’t mirrored within the turnover of the corporate as a result of inflation”. And the worst is but to return. “Industry is below an incomparably greater degree of stress than different sectors. One in ten ETIs announce that it’s going to cease manufacturing”, he indicated.

At METI and CPME, we notice that corporations are struggling to develop prices. Without a mechanism to cap vitality costs, “France is threatened with a brand new wave of deindustrialization like in 2008”, warns Frédéric Querrier.

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